UK Chancellor to Freeze Fuel Duty Amid Rising Prices

Chancellor John Healey is anticipated to freeze fuel duty and retain the 5p per litre discount in his forthcoming Budget, a move aimed at alleviating pressure on motorists facing escalating pump prices. This decision comes as the Middle East conflict and ongoing repercussions from Russia's invasion of Ukraine continue to drive up the cost of petrol and diesel.

Fuel duty, which was scheduled to be unfrozen for the first time in 16 years, is now expected to remain at 53p per litre. The 5p cut, initially implemented in 2022 as a temporary measure during the Ukraine crisis, is also likely to be extended again.

Recent data indicates the severity of the situation, with diesel prices surpassing £2 per litre earlier this month and average unleaded petrol prices reaching £1.75 per litre, their highest in over four years. A survey by the RAC found that 65 percent of motorists are cutting back on other expenses due to high fuel costs, an increase from 61 percent in April. Nearly half of those surveyed reported struggling to cope with current costs.

RAC senior policy officer Rod Dennis commented that while global events impact oil prices, the government has control over taxation levels. "The extent to which drivers are taxed, however, most certainly is," he stated.

Further analysis by the Countryside Alliance highlights the disproportionate impact on rural residents. The research found that individuals living in the countryside spend approximately £465 more annually on fuel compared to their urban counterparts, with average rural annual fuel expenses around £1,300, versus £835 for urban dwellers. This equates to nearly £9 extra per week for rural families, farmers, and businesses.

Tim Bonner, chief executive of the Countryside Alliance, emphasized the necessity of cars for rural communities to access essential services. He urged the Chancellor to make the 5p cut permanent and consider a temporary VAT reduction on fuel.

In addition to fuel duty, Healey is expected to make permanent a higher tax-free mileage allowance of 55p per mile for the first 10,000 miles driven for work. Rates for mileage above that threshold are set to increase from 25p to 35p. These measures are projected to benefit approximately three million employees and self-employed individuals.

Chancellor Healey acknowledged the impact of global events on domestic costs, stating, "Conflict in the Middle East and Europe is hitting families here at home through higher everyday costs. We can't control global events, but we can act where we can make a difference."